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Key financial market calls for 2022

We do not think the returns from many financial assets will be as good in 2022 as they were in 2021. For a start, we envisage a sell-off in government bonds in most places, reflecting the outlook for monetary policy. And, in general, we foresee an underwhelming performance from equities, including in the US and China. We expect this backdrop to be accompanied by a further broad-based rise in the US dollar. In view of the wider interest, this Global Markets Update is also available to clients of our Asset Allocation & FX Markets services.
John Higgins Chief Markets Economist
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Markets are creaking but not (yet) breaking

So far, the sell-off across bond and equity markets this year has not triggered major signs of systemic risk. If that were to change, central banks would probably have to step in to prevent a destabilising cycle of panic selling and money market distress from taking hold, even if such as step would to some extent clash with their plans to tighten monetary policy further. This publication takes stock of the various signs of stress across the global financial system. We intend to update the analysis periodically while the current market turmoil continues. In view of the wider interest, we are making this Stress Monitor available to clients of our Global Markets, FX Markets, and Asset Allocation Services.

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Global Markets Update

Earnings may be the next headwind for the S&P 500

Despite its struggles yesterday, we think the S&P 500 may have some way further to fall as the economy slows and more companies struggle to meet optimistic earnings expectations. Note: We’ll be discussing the markets outlook in light of Wednesday’s sell-off in a 20-minute online briefing on 19th May at 10:30 ET/ 15:30 BST. Register now.

19 May 2022

Global Markets Update

Bear markets, monetary tightening and the S&P 500

The current struggles of the S&P 500 don’t have much in common with most previous “bear markets”, but we still think one is likely as the Fed presses ahead with monetary tightening.

18 May 2022

More from John Higgins

Capital Daily

Rotation may lead to further US stock market underperformance

We expect sector rotation to lead to an underperformance of mid- and large-cap equities in the US relative to those in the rest of the developed world in 2022, in contrast to most of the period since the Global Financial Crisis.

11 January 2022

Asset Allocation Update

Case for US equity underperformance is looking strong

Although mid- and large-cap equities have fared better in the US than the rest of the developed world in most years since the Global Financial Crisis (GFC), we think the chances of it happening in 2022 are slim.

10 January 2022

Asset Allocation Chart Book

We doubt that 2022-23 will be as rewarding as 2021

2021 is on course to be a relatively good year for most investors. Admittedly, it has not been entirely without its casualties. Equities in China and much of Latin America, for example, have struggled, against a backdrop of growing political risks. However, industrial commodities have surged, the US stock market has delivered strong returns, and US Treasuries have been remarkably resilient considering this year’s surprisingly sharp rise in inflation. We estimate that a 60:40 portfolio of global equities and developed market government bonds has returned ~9% in US dollar terms this year so far.

21 December 2021
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